Indonesia: Capital Shortage leads to losses in efficiency
Christian B. Ramm, Investment Director at Nordic Microfinance Initiative AS, writes about his visit to the villiage of Derangga in the Seruyan district in Central Kalimantan, Indonesia.
In late February, NMI was in Kalimantan (Indonesian part of Borneo) to learn more about how microfinance can help to create sustainable agriculture in the world's fourth most populous country.
Lack of capital for seeds, fertilizer and other means of production hinders the effectiveness of agriculture for small scale farmers in Indonesia. Banks are located far away, and they require formal loan security, something the local farmers rarely have. Local money lenders often charge 100% interest per year. Even in such conditions, there is limited access to capital. Therefore, the local farmers stuck in a vicious cycle of sustained loss of efficiency on existing farmland. This was the clear message received from small-scale farmers when the Nordic Microfinance Initiative AS, together with the Indonesian non-profit research institute INOBU, visited the village Derangga in the Seruyan district in Central Kalimantan.
NMI also visited a cooperative in Pangkalan Tiga emphasizing sustainable circular economy, where it was shown how organic byproducts from agriculture are used as feed for both cattle and aquaculture.